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Brussels steps up efforts over tax avoidance

Brussels is increasing efforts to clamp down on tax avoidance by wealthy investors, including private equity partners and hedge funds, by forcing all 27 EU members to share confidential information on individuals’ investment income and capital gains for the first time.


Europe’s five largest economies – the UK, France, Germany, Italy and Spain – recently agreed to start sharing this information but extending the rules to the rest of the bloc would encompass countries such as Luxembourg and Ireland, where many of the continent’s biggest investment funds are domiciled.


The EU’s taxation commissioner told that he planned to issue a reform proposal “within months” that would require tax authorities automatically to exchange banking details on capital gains, dividends and royalties.


EU agreements on tax sharing have so far applied to interest on savings and deposits, rather than more complex investment structures.


Paris, Berlin and London are showing new-found zeal for closing tax loopholes after leaks exposing the inner workings of tax havens, as well as the explosive admission by Jérôme Cahuzac, France’s former budget minister, that he had lied about holding €600,000 in a Swiss account opened 20 years ago.


On the international stage the reforms were propelled by an aggressive US clampdown that required financial institutions to disclose data on American clients or pay heavy withholding taxes.


Luxembourg, which has historically opposed sharing individuals’ and companies’ banking information, recently abandoned some objections. Austria remains staunchly opposed.


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